Healthcare found itself a prominent target of antitrust enforcement by the Federal Trade Commission last year, as all three of the new cases litigated by the agency related to hospitals or life-science companies.
An annual report of the FTC and Justice Department's Antitrust Division (PDF)
said that although the total number of hospital mergers reported for antitrust review remained essentially flat for the year, regulators took a hard line on some of the healthcare provider deals.
“These challenges … are part of the Commission's broader effort to promote competition in the healthcare sector, which benefits U.S. consumers with products and services that are lower cost and higher quality,” the annual report of FTC and Justice Department activity says.
Between Oct. 1, 2010, and Sept. 30, 2011, the FTC filed federal lawsuits to block a total of three corporate mergers. Two of them were against health systems buying hospitals in Ohio and Georgia and the third involved the sale of clinical labs in California.
Toledo, Ohio-based ProMedica is appealing a legal ruling in the FTC's favor that would force the system to divest a hospital it acquired in May 2010. Meanwhile, the FTC has appealed to the Supreme Court
to overturn court rulings that would allow Phoebe Putney Health System to maintain its December 2011 acquisition of its sole competitor in Albany, Ga.
The report's review period did not include a hospital consolidation in Rockford, Ill.,
that was challenged by the FTC in November 2011 and abandoned by the parties in April.
In southern California, the FTC filed and then withdrew a challenge to the June 2010 acquisition of Westcliff Medical Laboratories
by rival Lab Corp. The FTC decided to withdraw its challenge rather than proceed to appeal after a district court ruled against its request for preliminary injunction.
Even though all of the FTC's new litigated cases in the fiscal year were in healthcare, industry-specific figures in the report say hospital mergers reported for antitrust review remained virtually flat during the period.
All told, 29 hospitals or health systems reported plans to make acquisitions during the 2011 federal fiscal year, down from 28 in the previous period.
But the number of deals involving mergers by ambulatory healthcare services spiked to 30 from 13 in the previous period. Modern Healthcare reported this week
that regulators have been devoting more scrutiny to deals involving the purchase of doctors offices in recent months, even though many fall below the reporting threshold for mandatory antitrust review.